Cigna 2011 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2011 Cigna annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 180

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180

87CIGNA CORPORATION2011 Form10K
PART II
ITEM 8 Financial Statements and Supplementary Data
NOTE 9 Pension and Other Postretirement Benefit Plans
A. Pension and Other Postretirement Benefit
Plans
e Company and certain of its subsidiaries provide pension, health
care and life insurance dened benets to eligible retired employees,
spouses and other eligible dependents through various domestic and
foreign plans. e eect of its foreign pension and other postretirement
benet plans is immaterial to the Company’s results of operations,
liquidity and nancial position. Eective July1,2009, the Company
froze its primary domestic dened benet pension plans. A curtailment
of benets occurred as a result of this action since it eliminated the
accrual of benets for the future service of active employees enrolled in
these domestic pension plans. Accordingly, the Company recognized a
pre-tax curtailment gain of $46million ($30million after-tax) in 2009.
e Company measures the assets and liabilities of its domestic pension
and other postretirement benet plans as of December31. e following
table summarizes the projected benet obligations and assets related
to the Company’s domestic and international pension and other
postretirement benet plans as of, and for the year ended, December31:
(In millions)
Pension Benets Other Postretirement Benets
2011 2010 2011 2010
Change in benet obligation
Benet obligation, January1 $ 4,691 $ 4,363 $ 444 $ 419
Service cost 2 2 2 1
Interest cost 228 240 20 22
Loss from past experience 453 379 16 36
Benets paid from plan assets (273) (258) (2) (2)
Benets paid - other (34) (35) (28) (32)
Benet obligation, December31 5,067 4,691 452 444
Change in plan assets
Fair value of plan assets, January1 3,163 2,850 23 24
Actual return on plan assets 156 357 1 1
Benets paid (273) (258) (2) (2)
Contributions 252 214 - -
Fair value of plan assets, December31 3,298 3,163 22 23
Funded Status $ (1,769) $ (1,528) $ (430) $ (421)
e postretirement benets liability adjustment included in accumulated other comprehensive loss consisted of the following as of December31:
(In millions)
Pension Benets Other Postretirement Benets
2011 2010 2011 2010
Unrecognized net gain (loss) $ (2,331) $ (1,805) $ (30) $ (14)
Unrecognized prior service cost (5) (5) 35 51
POSTRETIREMENT BENEFITS LIABILITY ADJUSTMENT $ 2,336 $ 1,810 $ 5 $ 37
During 2011, the Company’s postretirement benets liability adjustment increased by $558million pre-tax ($360million after-tax) resulting in
a decrease to shareholders’ equity. e increase in the liability was primarily due to a decrease in the discount rate and actual investment returns
signicantly less than expected in 2011.
Pension benefits
e Company’s pension plans were underfunded by $1.8billion in
2011 and $1.5billion in 2010 and had related accumulated benet
obligations of $5.1billion as of December31,2011 and $4.7billion
as of December31,2010.
e Company funds its qualied pension plans at least at the minimum
amount required by the Employee Retirement Income Security Act of
1974 and the Pension Protection Act of 2006. For 2012, the Company
expects to make minimum required and voluntary contributions totaling
approximately $250million. Future years’ contributions will ultimately
be based on a wide range of factors including but not limited to asset
returns, discount rates, and funding targets.
Contents
Q